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The Growth of Online Retail in the UK

Cast your mind back to the end of 2014.  The classic British Christmas shopping image was once that of Boxing Day scuffles outside retail stores, as eager shoppers waited in disorderly lines for the sales to commence. How times change! Last year iconic moments were supplied by the tweeted tales of Black Friday misery as websites were brought to their knees by the unrelenting pressure of retail sales traffic.

In a way this represents a very real shift: from the retail store to the online store, from a British holiday to a global retail event, and from a physical challenge to a virtual one. It speaks volumes about the growth of online retail in the UK.

With RBTE (the Retail Business Technology Expo) throwing its doors open on 10th March at London’s Olympia, it’s a great time to reflect on just what the UK’s growth of online retail means, what opportunities it presents to retailers and what threats there may be.

And it’s also a great time to unveil some of the latest revealing statistics that Dyn has collected from our global customer survey about attitudes to eCommerce.

Online Retail in the UK

The latest figures from the IMRG Capgemini e-Retail Sales Index show that in 2014 online sales in the UK exceeded £100bn for the first time ever. They are currently growing at around 14% each year, and this double digit growth that looks set to continue.

It’s not just sales that are growing: the proliferation of devices that we can shop from is also radically changing the retail landscape. Over the Christmas shopping period online sales accounted for £21.6bn, of which £8bn was accounted for by smartphones and tablets. This represents a massive 55% growth year on year.

These figures are confirmed by any other trusted source you care to check, but what do they mean for UK retailers? Let’s hear from some key industry figures before looking at what the opportunities and threats are.

“There is […] a new shape of trade over the Christmas period. Black Friday was John Lewis’s biggest ever week for sales in our 150 year history. During the early hours of trading there was a 300% increase in traffic to our website.”
Mark Lewis, Online Director at John Lewis (Source)

“Online sales haves a leading role to play in driving overall sales growth, with more shoppers than ever choosing the convenience of buying online. […] Substantial spend is needed to improve the robustness of retailers’ systems and improve the experience for customers.”
David McCorquodale, Head of Retail at KPMG (Source)

“E-commerce is the fastest growing retail market in Europe.”
Centre for Retail Research (Source)

Online Opportunities

Shoppers are increasingly expecting to be able to shop how they want, and to be provided with a consistent experience whether they are in store, online or using an app. Retailers who respond positively to these demands will win sales (and customers) from competitors who are slower out of the blocks.

John Lewis, for example, achieved sales growth of nearly 6% this Christmas, but its growth was driven entirely by online. It reported flat shop sales compared to its surging 19 per cent online growth.

The true picture, however, is not quite so straightforward. What drove online sales, and accounted for 56% of them, was the opportunity to ‘click and collect’ in store. It is precisely this flexibility that a successful omnichannel strategy is all about, and, no doubt, why John Lewis have invested in an entirely new distribution centre to cater for this growing demand.

Shoppers are also happy to look beyond local, and even national, businesses to find what they want. The global potential of online retail is something Mark Lewis, our retail Internet performance expert at Dyn EMEA, will be sharing at the RBTE eCommerce Bootcamp.

Finally, the experience of 2014’s Black Friday in the UK revealed just how quickly global retail initiatives can catch on, and the very real effects they can bring.

The Threats to Online Retail Success

The findings from Dyn’s latest global consumer survey can help us understand exactly what these threats may be. You can download for full report here, but for now let’s just look at some pertinent findings.

Online sales are significant for a large section of your audience

  • More than 90% of consumers make at least 25% of their purchases online.
  • 56% are confident they’ll be buying more online soon.

Internet performance and trust are critical to your success

  • 60% cite slow websites and concerns around security as factors that deter them from completing a purchase.

Global markets are increasingly accessible

  • 67% have shopped online with retailers located in other countries in the last year.
  • 72%, however, rated the experience as no better than ‘okay’.
  • 85% would consider buying online more often from a retailer based in another country if it were faster and easier

If retailers are going to take advantage of online growth potential, their Internet performance is going to need to be impeccable. There’s little room for the crashes that affected high profile brands such as Tesco, PC World, Argos, Boots and Currys last Black Friday: our survey reveals just how quickly shoppers abandon sites that fail to deliver.

Online retail sites must see the ability to make the right, flexible infrastructure decisions as being on a par with the ability to offer the right products at the right price. Infrastructure, like your supply chain, must be planned, monitored, controlled and optimised to offer an exceptional end-user experience, wherever and however they may be shopping.

From our survey you can see both the opportunities and the threats for online retailers. From us you can find the Internet performance solutions that retailers need.

It’s what we do.

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Whois: Paul Heywood

Paul Heywood is the EMEA Director of Business Strategy and Sales at Oracle Dyn, a pioneer in managed DNS and a leader in cloud-based infrastructure that connects users with digital content and experiences across a global internet. Follow at Twitter: @Paul_Heywood and @Dyn.

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